U.S. avoids another shutdown

Despite a number of partisan conflicts in the U.S. Congress, members from both major parties came together to vote in favour of a funding bill for the federal government that would avert an imminent shutdown of public services.

Winning support by 318-109 votes in the House of Representatives on Thursday and 73-26 in the Senate on Wednesday, the bill passed on Capitol Hill staves off the prospect of the U.S. government closing down following the self-imposed $85-billion cuts in public expenditure from the so-called “sequestration” plan.

The financing afforded by this bill will keep government services going until the close of the financial year at the end of September 2013. However, shortly before that point, fiscal crisis may once again loom as lawmakers will have to agreeing on a way to raise the borrowing limit.

In 2011 matters nearly came to a head over the debt ceiling issue, when in August of that year the nation cameclose to a default and debt rating agencies felt alarmed enough at the congressional logjam to downgrade the U.S.’ sovereign rating from its cherished AAA status.

At the heart of the tussle between Democrats and Republicans is the means by which debt is stabilised — whether by increasing taxes or cutting expenditure.

Democrats including President Barack Obama have pressed for tax increases contributing to stronger revenue in the years ahead, especially taxes on the wealthiest Americans, whereas Republicans have sought to focus public attention on the need to streamline the major items of public expenditure in the federal budget, particularly Medicare, Medicaid and Social Security.